In commercial leasing, what is meant by a "net lease"?

In commercial leasing, a "net lease" is characterized by the tenant being responsible for all additional property expenses beyond just the base rent. This typically includes operating costs such as property taxes, insurance, and maintenance fees. By stipulating that the tenant pays these expenses, the landlord can offer a lower base rent, making the property more attractive while transferring financial responsibility for property-related costs to the tenant.

Understanding this structure is crucial for both landlords and tenants. Landlords benefit from a predictable income stream through base rent, while tenants must carefully analyze potential costs associated with property management. While the other options suggest different arrangements—such as the landlord covering expenses or adjusting rent for inflation—they do not accurately reflect the concept of a net lease, where the emphasis is specifically on the tenant taking on these financial responsibilities.